The Norwegian economy: Moderate growth to continue
The moderate growth in Norwegian economic activity experienced last year is expected to continue for another few years, acording to Statistics Norway (SSB).
SSB analysts believe that loss of powerful growth impulses from petroleum investments will be replaced by a moderate increase in growth in other demand. Unemployment will continue to rise slightly, to almost 4 per cent in 2015.
Growth in the Norwegian economy in 2013 was markedly lower than the previous year. The economic recovery through 2011 and 2012 began to falter towards the end of 2012, and last year mainland GDP growth was somewhat lower than trend. Unemployment rose from 3.2 to 3.5 per cent. At the same time, growth is showing signs of picking up in many other countries.
Among Norway’s most important trading partners, this improvement is most pronounced in the USA, the UK and Sweden, whereas the Danish economy has barely grown for three years. Euro area GDP is now also growing, albeit cautiously, after a long recession.
Unemployment levels are very high, but there are signs of improvement in many countries. Because fiscal policy remains tight in much of the OECD area, the analysts do not envisage a cyclical upturn for Norway’s trading partners collectively before 2015. Interest rates will therefore remain low in the near term.
Weak growth in demand from abroad in 2013 coincided with low or moderate growth in most domestic demand components. A notable exception was petroleum investment, which grew 18 per cent last year. This investment was the essential reason that mainland economic growth was only slightly below trend, and that the increase in unemployment was not greater.
In contrast to other countries, Norway also benefited from the fact that growth in general government demand was on a level with trend growth in the mainland economy.
In the period ahead SSB analysts expect no significant growth in petroleum investment. Slightly stronger growth in demand from several other areas is expected to compensate for the loss of this powerful stimulus. Exports in particular may increase somewhat more as growth in export markets gathers pace.
(SSB Press release)